Ailing Bebe Stores Relying on Joint Venture to Save Its Business

Bebe Stores Inc., the California retailer that has been bleeding money for the last four years, said its recently formed joint venture with Bluestar Alliance to find licensees for the brand is marching forward quickly.

Licensees have been found for sportswear, denim and socks in a deal with Gbs USA; children’s apparel with Mamiye Brothers; intimate wear in an agreement with PPI Apparel Group; watches in a deal forged with Accutime Watch Corp.; luggage with American Traveler Inc.; travel accessories with Miworld Accessories; and jewelry with Haskel Jewels.

Other categories being negotiated for licensing include dresses, activewear, outerwear, handbags and cold-weather accessories. All products will be available in stores next year.

“Over the decades, we built one of the great global brands in the women’s fashion world,” said Manny Mashouf, Bebe’s founder, chief executive and chairman of the board. “However, the value of our brand, its reach and potential is clearly not reflected in investors’ current perception of the company and its valuation.”

He added, “The strategic decision to aggressively pursue a licensing strategy allows us to capitalize on the value of our brand in all categories and channels on a global scale.”

In early June, Bebe signed a joint venture with Bluestar Alliance, which gave the retailer a $35 million infusion of funds to continue its business.

Under the terms of the agreement, Bebe contributed its trademarks and related intellectual property in exchange for just over 50 percent of the joint venture. New York–based Bluestar has just under 50 percent of the joint venture and is leveraging its existing brand-management organization and infrastructure to develop a wholesale domestic and international lifestyle licensing business.

Bluestar—whose others brands include Kensie, Nanette Lepore, Catherine Malandrino, Michael Bastian, English Laundry and Limited Too—will manage the day-to-day operations of the joint venture and hopes to expand the brand internationally.

Currently, Bebe has 150 international points of sale, but the intent is to double that within two years through strategic retail licensing agreements. There will be a focus on expanding the brand to Central and South America, Europe, and the Asia/Pacific region.

The publicly traded retailer, with 146 stores and 38 outlet stores, has seen the red ink flow for several years. In 2015, the company reported a net loss of $27.67 million on $428 million in revenues. In 2014, net losses totaled $73.68 million on $425 million in revenues, and in 2013 net losses were $77.42 million on $463 million in revenues.

Following years of dismal sales, Mashouf took the reins of the struggling mall-based women’s retailer in early February and ousted CEO Jim Wiggett. Mashouf then announced a 14.6 percent job cut in the company’s design, merchandising and production division and hired Bebe alum Walter Parks to rejoin the company as its president.

Mashouf said the cuts and the executive changes would help improve Bebe’s performance.

Bebe, headquartered in Brisbane, Calif., was founded in 1976 and has defined itself as a place for “chic, contemporary fashion.” In 2008, it ran a fleet of more than 300 boutiques across the United States. That has been reduced by 50 percent in eight years.